Sir Christopher Hohn’s TCI Fund Management has sharply reduced its long-standing investment in Microsoft, citing concerns that rapid advances in artificial intelligence could disrupt the software giant’s core businesses, according to a report by the Financial Times.
The report cites an investor letter seen by the FT as revealing that the London-based hedge fund cut its Microsoft exposure from around 10% of its portfolio at the end of 2025 to roughly 1% by March 2026, effectively unwinding a position valued at about $8bn.
Shares in Mircrosoft fell by 1% on Friday.
In the letter, Hohn said the pace of AI development had created uncertainty over Microsoft’s long-term competitive positioning. He pointed in particular to the company’s Office productivity suite, suggesting that AI-driven tools could reshape established workflows and potentially lead to new competing platforms. He also highlighted potential risks to Microsoft’s Azure cloud division.
TCI, which declined to comment, had been a significant shareholder in Microsoft for much of the past decade and benefited from a multi-year rally in the stock, which rose substantially over that period.
The exit comes as sentiment around Microsoft’s AI exposure becomes more divided across the hedge fund industry. While the company has been a major beneficiary of enthusiasm around its partnership with OpenAI, investors have increasingly debated whether large-scale AI investment will translate into durable earnings growth or intensifying competition.
Microsoft shares have also come under pressure in 2026, falling amid concerns over monetisation of AI infrastructure spending and rising competition in cloud computing. Although Azure continues to grow strongly, rivals such as Google Cloud have recently reported faster expansion, while Amazon Web Services remains the dominant market leader.
The reshuffle in TCI’s portfolio also shows a notable increase in its Alphabet position, which rose from around 3% to 5%, making it the fund’s largest technology holding.
Despite the Microsoft exit, Hohn’s broader investment approach remains highly concentrated. TCI typically holds a small number of large positions and is known for long holding periods averaging close to a decade, alongside occasional activist engagement with company management.
The fund’s portfolio is still weighted toward large-cap, cash-generative businesses outside of pure technology. Its biggest holding remains GE Aerospace, alongside significant stakes in Visa, Moody’s and infrastructure group Ferrovial.
